After a rather quiet trading week, the economic data picks up steam with inflation figures due for release across the US, UK, and the Eurozone. The monthly labor market data from Australia and the UK will be coming out this week including the central bank meetings from the ECB and the Bank of Canada. Among other things, the British Prime Minster, Theresa May will be holding a press conference this week talking on her vision for Brexit while the Fed Chair, Janet Yellen will be giving speeches on Wednesday and Thursday.
U.S. inflation and Yellen speeches
A short holiday week for the U.S., the markets are closed on Monday on account of Martin Luther King day. On the economic front, the remainder of the week will see inflation figures coming out from the U.S. on Wednesday with headline inflation expected to rise 0.3% on a month over month basis in December, while core inflation is expected to rise 0.2%. Later in the week on Thursday, the building permits and Philly Fed manufacturing index data is expected to show a modest increase.
U.S Inflation y/y 1.6%, Nov 2016
The Federal Reserve Chair, Janet Yellen will be speaking on Wednesday and Thursday, although it is unlikely that Ms. Yellen will say much about the next rate hike. A positive beat on expectations on inflation could, however, trigger some comments from the Fed chair, although any prospects of a rate hike are expected to come only at the March FOMC meeting.
The UK inflation, jobs, and retail sales
A busy week for the UK starts off from Tuesday onwards as inflation figures for the month of December is expected to show a 1.4% increase on headline consumer price index on a year over year basis. Core inflation is expected to rise at 1.4%, the same pace as the month before. PPI Input is also forecast to rise in December following a 1.1% decline previously.
UK Inflation m/m: 1.2%, November 2016
A day later, the jobs report is expected to show that the UK’s unemployment rate is unchanged at 4.8% while the average earnings index is expected to rise 2.6%. The busy week closes with Friday’s retail sales figures coming out.
ECB and BoC monetary policy meetings
The European Central Bank will be meeting this week for its first monetary policy meeting of this year. No major changes are expected from this meeting after the central bank made changes to its QE program last month. In the absence of any policy changes, the central bank could focus on the recent uptick in inflation which will be confirmed earlier in the week. Still, officials could remain cautious until there was further evidence that inflation was rising.
The Bank of Canada’s meeting is expected to be a non-event as well, but the central bank is seen likely to come out dovish during its meeting this week. No changes to interest rates are expected, which currently stands at 0.50%.
Theresa May to detail Brexit vision
On Tuesday, the British PM Theresa May will be giving a speech where she is expected to outline her vision for Brexit. The speech is expected to spell out the PM’s vision on Brexit and hopes on creating a “global Britain” according to the PM’s spokeswoman. The British PM has been planning the address since December and is expected to attempt to answer questions from both businessmen and politicians alike. The UK is still sticking to the timeline of invoking Article 50 by the end of March 2017.
Helen Bower, spokeswoman for the prime minister said last week that “She [Theresa May] will be making a speech on Tuesday setting out more on our negotiating approach to Brexit as part of preparing for the negotiations and continuing to be an outward-looking nation.”
The event is likely to garner a lot of attention from traders and the markets which are likely to weigh on the British Pound.